The Obama administration continues to push electric vehicles despite the fact that they have sold very poorly around the country. There are number of reasons why consumers haven't adopted electric vehicles in larger numbers, the biggest of which are the cost of the vehicles and range anxiety. The component that adds the most cost to EVs is undoubtedly the battery pack.

U.S. Energy Secretary Steven Chu has announced that the federal government is working to dramatically reduce the cost of battery technology for electric vehicles. Cheaper batteries would mean that automakers could [ideally] sell their EVs and hybrid vehicles that utilize rechargeable battery packs at a lower price.

President Obama wants 1 million plug-in electric vehicles and hybrids on highways around the United States by 2015. Currently, the federal government offers a $7,500 tax credit for people who purchase electric vehicles and Obama has been pushing to increase the tax credit to $10,000.

"It's ambitious, but we'll see what happens," said Chu during a talk with reporters during the Washington Auto Show.

"For the engineers in the room or those who follow this, you might be saying to yourself, 'What are they smoking,'" Chu said about aggressive plans to cut the price of batteries. "We're not smoking anything…. They are ambitious goals but they are achievable goals."

The original report from Washington supporting the goal of 1 million plug-in vehicles on the roads by 2015 expected Ford to sell 20,000 Focus EVs in 2012. Ford sold fewer than 700 of the vehicles and has resorted to significant price cuts to spur demand. Chevrolet also sold only 24,000 Volts in 2012 while the report had predicted 120,000.

Not sure how it is different from just about any other industry. Why does the goverment subsidize people buying houses (mortgage interest deduction), giving to charity (another deduction), etc, etc, etc.

Throughout our history, the government has been pushing agendas. I do not agree with the tax breaks on these cars, but not because I do not think the cars are a good choice, it is that the government should not be picking winners and loosers. There should be no tax breaks, it should be a flat tax (with a floor), but no ceiling, with no deductions, credits, breaks, etc.

The gov't can't make EVs a winner. All it can do it give it a nudge to give it a chance when nobody wants to take the first step due to risk (and other companies profiting down the road from their pioneering investment).

By the time the EV subsidy expires, we're looking at around $7B. Total auto sales will be around $3T in that time. Gov't influence is a drop in the bucket (not even close to 1%), but it's enough to get the ball rolling.

"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007